Is the USDA Guarantee fee deductible?

[IreneS · Accepted solution]

UPDATED FOR TAX YEAR 2019

Yes.   The USDA guarantee fee, like the VA funding fee, is considered a type of mortgage insurance.  In late 2019, Congress extended an expired tax provision that allows homeowners to deduct private mortgage insurance and other eligible mortgage insurance premiums. The tax break expired at the end of 2017, but the extension allows eligible homeowners to claim the deduction for their 2018, 2019 and 2020 federal income taxes.

[Edited | 4/9/2020 |  10:37am PDT]

[zbtolman]

Look into this.

Lenders are obligated to provide clients with their 1098 statement by January 31, 2018. Following the form’s 2017 instructions, many left Box 5 for mortgage insurance premiums blank at this time. However, on February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law, retroactively extending a number of tax provisions for the 2017 tax year. Among these changes was reauthorizing the treatment of mortgage insurance premiums as qualified residence interest for the 2017 tax year.

As a result of these changes, lenders may need to issue corrected 1098 statements to clients who paid mortgage insurance premiums in 2017 in Box 5.